Stablecoin issuers could soon face some of the same anti-money laundering (AML) obligations as traditional banks under a new federal proposal. While the rule stops short of requiring surveillance of every stablecoin transaction, it signals another milestone in Washington’s determination to establish a comprehensive regulatory framework for digital assets.
The proposal would require stablecoin issuers to conduct bank-style identity checks on their direct customers, but it would not require issuers to identify every person who ever uses one of their stablecoins. Ordinary users could continue trading stablecoins peer-to-peer on secondary markets without the issuer needing to collect personal information.
Building Off the GENIUS ACT
The proposal is part of a broader effort to interpret and implement the GENIUS Act, by fitting stablecoins within the existing bank regulatory framework. The GENIUS Act, signed into law in July 2025, requires permitted payment stablecoin issuers (PPSI) to be treated as financial institutions for Bank Secrecy Act purposes and to maintain an effective customer identification program.
The proposed rule draws a sharp distinction between the primary and secondary markets. In the primary market, where issuers directly issue or redeem stablecoins, they would be required to implement customer identity verification measures. In the secondary market, where tokens move between other parties, the issuer would generally not be involved, even though PPSIs may face demands for direct redemption from token holders who acquired their coins on that market.
The proposal recognizes that imposing AML regulations on stablecoin transactions in the secondary market could be difficult. Regulators noted that requiring issuers to monitor and verify the identity of every users involved in a payment stablecoin transfer could create a global compliance obligation extending far beyond their direct customers. According to the proposal, it would be hard to implement in practice and could disrupt the industry.
A Growing Concern
Those implementation challenges have not diminished regulators’ concerns about illicit finance in the crypto sector. Money laundering schemes involving cryptocurrency reached $82 billion last year, up from $10 billion in 2020, increasing pressure on authorities to bolder oversight of digital asset markets.
In addition to the Federal Reserve, a sizable group of federal regulators is backing the proposed rule, including the Financial Crimes Enforcement Network (FinCEN), the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the National Credit Union Administration. The proposal will remain open for public comments for 60 days.
